Gene Lee | Bloomberg | Getty Images
Wall Street suffered from a whip in August as trade headlines and the recession crisis sent shares into a wild ride in the last full month of summer.
The S&P 500 posted 11 moves with over 1% in 22 trading sessions. for August. These movements include three declines of at least 2.6%, as well as the worst day of the index year on August 5. The Cboe Volatility Index (VIX), considered the best Wall Street fear indicator, traded at 24.81
This month's successful trading action was driven mainly by two factors: an escalation in US-China trade and a recession signal flashing from the bond market. As trade tensions are expected to continue and bonds continue to point to a recession, the changing market trend is expected to continue.
"This is not just normal instability. You have that jump in these almost all trading days, ”says Willie Delvic, an investment strategist at Baird. "Whether this continues or not, in terms of the title, I see no reason why it does not."
This is what happened in August
August began when President Donald Trump announced on Twitter that he had A 10% tariff will be introduced at $ 300 billion in Chinese imports from September 1. The announcement erased more than 1% gain for the S&P 500 that day. The index ended the session on August 1 by 0.9%.
On August 5, Trump accused China of manipulating its currency after the yuan dropped to levels that had not been observed for more than 10 years. The S&P 500 dropped nearly 3% that day.
"Trump loves being the hard man," said Maris Og, president of Tower Bridge advisers. "If history is any guide, it will go on and be a difficult person."
"I would be surprised if we went forward," Og said, referring to trade talks. "I guess the Chinese don't want him as president, so it will make it difficult."
Stocks have tried to stabilize after a sharp decline after the US said it would delay some tariffs on certain Chinese goods. However, the upturn in the market was short-lived as the yield on the 10-year treasure fell below its 2-year counterpart.
This is known as an inversion of the yield curve and is feared by experts as it has preceded the recessionary periods in the past. The 2-10 yield curve first turned within the day on August 14, prompting investors to subtract stocks in favor of long-term US debt and other traditional safe havens such as gold and silver. Dow Jones Industrial Medium Decline
"The yield curve will have to start to rebound, driven by higher yields with greater maturity, to send a more positive long-term signal to the economy and equities," he said Tom Essay
Trade tensions escalated again last week after China introduced new tariffs on US products worth $ 75 billion. Trump responded by ordering US companies to move operations outside of China and announcing higher tariffs on killing Chinese goods.
Stocks rebounded sharply in the last week of the month as both sides softened their rhetoric on trading. According to Chinese Foreign Ministry reports, negotiators on both sides maintained "effective communication" on Friday, with Trump saying some trade discussions .
But overall, the S&P 500 lost nearly 2% in August and entered its worst monthly performance since May, when it dropped 6.6%.
Many losers, but some winners too
The energy and financial sectors had their worst performance in the S&P 500 in August. For the month, they fell by 8.7% and 5.1%, respectively, as the trade war and the reversed yield curve hampered global growth expectations.
Concho Resources was the largest drop in energy reserves, losing a quarter of its value in August. Schlumberger and Devon Energy fell about 20%.
Among the big banks, Bank of America was the biggest loser, falling by about 10%. Citigroup, J.P. Morgan Chase and Wells Fargo also fell by at least 3.8% in the month.
Technology stocks also suffered as the sector lost 1.7% as stocks such as Skyworks Solutions slid above 11% in the month. In all, eight of the 11 S&P 500 sectors fell in the month.
The biggest winners in August were traditional safe havens such as gold, silver and long-term bonds. SPDR Gold Trust (GLD) has gained more than 7% over this time period, while iShares Silver Trust (SLV) has jumped over 12%. The iShares 20+ Year Treasury Bond ETF (TLT) also rose 10.8% in August.
No stock break in September
Investors hoping the calendar order will bring some peace of mind to the market may be mistaken if history is any indication.
Since 1950, September has been the average worst month for the S&P 500. Almanac data from the stock trader show that the S&P 500 is an average loss of 0.5% in September.  "It will be more a" leash "than a" exhale and expect something to change, "Derice told Bird.
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